Thank you for joining me on this tuesday morning. Kayla and kelly back for more. Always great to have you. First the Justice Department saying it found a way to unlock the iphone without apples help dropping the case entirely. Aman is live in washington with more. Good morning, what a dramatic turn of events as the u. S. Government said its dropping its case here. And iphone of San Bernardino shooter and instead the government saying it found another way into the iphone, a mystery way from a mystery 3rd party it will not reveal. The u. S. Government and its process all of that now raising questions will they be able to use the same technique in other cases Going Forward . Other Law Enforcement cases . I have been talking to Law Enforcement officials about that and they tell me why theres two reasons why that might not happen. One is this is a labor intensity and resource intensive process. Its not scalable. They cant do it over and over and over again and another reason you might not see this solution at play in other cases out there for Law Enforcement is that the solution here is so secretive. Its very closely held. Its one of the reasons they might not want to use it in a small level criminal case because in Court Filings in those cases they might be required to stay in Court Documents exactly how they did it. They dont want to reveal how this was done. It will be a closely held secret for a long time but this particular fight not over. The on going debate will continue for awhile. Thanks. Thats a big question. Where the debate goes from here. Joining us now first on cnbc, the California Republican congressman thats been outspoken on this issue. Involved in the debate with james comey about this. We dont know what method was used here. You suggested that mirroring might be a way to do this. The fbi was dismissive of that at the time. Thats a variant of it the people are speculating was used here. What was your reaction of the fbis move here to drop this case and is the next step legislation that you or others need to bring in order to keep this happening over and over again. The next step is to get educated and see where the fbi or other Law Enforcement come back with a demand or a request for some involvement by companies that encrypt their product. Remember one of the reasons that this case probably was dropped wasnt just that they went out and found another way. It was also that they overreached. They didnt ask apple will you assist us in getting the information off this phone. They asked apple for three specific things that had had to be developed that would have automated, made it extremely easy and remote the possibility of tunnelling in and getting information off your phone. So we suspect, i suspect that if the fbi approaches a case again they will make a better choice as to what they ask a company to do because they were, in my opinion, surely going to lose this case. But is the well poisoned at this point in a way . It seems like theres a break down in trust. The language that tim cook has used to describe how surprised he was to learn of the government suit through the news media. Anything that apple does to help the government could arguably be used in the future in a governing case to say look at all apple has done in the past to aid us and therefore they should take this next step. I mean, it seems like perhaps legislation, some kind of rules of the road here, the only way forward. Well, certainly congress has to get educated. Theres a working group between the two committees of jurisdiction and the house of representatives put together by the speaker. It exists so that in fact we could begin educating on encryption but also balancing that with your constitutional protections. Remember and i straw poll this morning on cnbc. The American People that unbalanced they should have this right to privacy. That encryption is a tool that protects everything they do from their Bank Accounts to the software we use. They depend on strong encryption so they dont get cracked. If you load a program on your computer you want it to be the program you loaded and not one cracked and modified and turned into malware. These things require that we find the right way to innovate. We do respect the fact that the fbi had a desire to get this and in this case they found the right way to do it which was to develop a tool that was not available to the public. That they can use when they need to and this may be the model Going Forward is for the clandestine agencies and the fbi to develop tools and keep their mouth shut a little bit about it. You obviously believe this was the right way, the preferable way to go about getting this information. I wonder if you believe it does remove some sense of urgency for congress to reach legislation on this issue which will define the relationship between consumers and Tech Companies for a long time to come. I think your point is right. It does give us a little bit of space. The act that they used was a 1790 piece of legislation and shortly before that we had a constitution. Most of what needs to be defined in the way of your rights and your privacy and freedom of association and your ability to encrypt and there may be little that Congress Needs to do. Having said that, we only recently passed the usa freedom act which pushed back on Law Enforcement for some of the excesses that occurred after the patriot act so were constantly looking at how to balance your constitutional protections and Law Enforcements need to do their job. Either reasonable warranted searches in the area or Design Systems to defeat court orders putting themselves and criminals and terrorists above the law. Well, you know, our Founding Fathers never said you couldnt have a stronger door or even built a fortress. Theres no prohibition on that. So the Fourth Amendment provides a case under which Law Enforcement or your government can seek to look at something. Do you have a back door to your government and today the same encryption and the ability to have back doors, who gets the back door and who doesnt . Indeed. Theres one aspect of this case, were almost out of time but i was wondering your reaction to. What troubled me is the fbis con thaengs the publicity around this court case allowed them to find the expert that could crack this phone. Shouldnt our intelligence agencies be good enough at their jobs and at finding experts in the field that they dont have to bring court cases against u. S. Companies in order to find expertise . I said it in live testimony of the fbi director and ill say it again, they took a shortcut. They went and did this rather than doing their job. I served on the select Intelligence Committee for a number of years. We do develop tools. It was not an accident that i questioned the fbi director. He took the path of least resistance what he wanted to do was prove a point and discovered that the American People are not ready to have that point proven. That anyone can be ordered to develop something to help the government at a time when people are concerned about their own privacy. So i do believe that he was wrong and i dont believe he was genuine. We do have tools behind closed doors. I described a process that is probably not a lot different than the one that they ultimately used because its not a secret to do that. Well, congressman, we certainly appreciate your insight and thanks for joining us on this important issue. Thank you. 2. 5 days left in the quarter. The dow was down as much as 100 points this morning. Down 42 points. The s p is down. 2 . Nasdaq in positive territory. Sector wise tech is leading. Energy is lagging. Not surprisingly the trigger for todays drop and the dow and the s p was 3. 5 decline in the price of crude oil today. Meanwhile, barclays downgrading a couple of tech names cutting e bay to underweight citing weak fundamentals for ebay and a descent period of consolidation for linked in. Both of those stocks in negative territory today. When we come back do founders make the best ceos pandora hoping the answer is yes with the return of its founder. Well take a look at the numbers behind that trend. Plus the stock market recovered from early lows and the ipo market still doing a whole lot of nothing. Why is that . When could hah change . And another example of crazy home prices in Silicon Valley in facebooks hometown, many local firemen have to live at least 100 miles away to find affordable housing. The fire chief will join us later on this hour. Squawk alley will be right pack. Sales event is on. With extraordinary offers on the stylish, allnew rx. And the dynamic nx. This is the pursuit of perfection. A lot of tech news to get to us today. Joining us is four square cofounder. Thanks for having me. We have to start with apple to get your take on this. The government dropping after the doj said it was unable to lock the iphone itself with the help of a third party. Apple riting in a statement that the case would set a dangerous precedent writing this case never should have been brought. Theres probably a temporary exhale happening on behalf of Tech Companies but whats the thought process. But the larger question is still needed. Its a particular device. They havent enclosed the methods that they did that. And i imagine this is the end of it and theres another version of this in a month or so. And i dont think it matters what you want to here. I would be surprised if they disclosed the actual method and thats like giving instructions for how other people would like to move it. That could be valuable data. How does this factor into your business and what secrets you want to keep in data and what information government or others should have access to . Its interesting we always put the users in control of the information. Occasionally Law Enforcement asks us to provide information we have been able to buy in these cases but i think its fundamentally different in terms of we need the key to the iphone which is is the key to all the iphones in the world. Tim cook said the only thing we can do with every release is to go up and increase the security level. I know that you are in a different role now but how do you as a technologist think about increasing the security of your product given what the government has shown its willing to do. Every Technology Company has a whole team of people that work on security. Making sure the servers are secure and the data is secure. Every tech company is focused on this. No one wants to be the victim of an attack. Im not surprised that every single version of every piece of software is going to get better and better. Moving on. Another down day for pandora after the founder returned as ceo. Pandora is the latest company to bring its founder back as ceo. Another recent example at tw twitter and the detractions. Its no secret here. Theyre interested in investing and finding other companies. I put someone else in the ceo role and im the executive chair. Im in the vision and strategy of the company and make sure that the Company Stays on that path. Were going to continue this conversation but we do have breaking news on gop front runner donald trump. Nar we go to sue at headquaters. Yes, specifically this involves the Donald Trump Campaign manager who has been charged over alleged battery in florida. It concerns the reporter. Thats according to various news sources including reuters and abc news. He was arrested in florida and charged with simple battery according to the Police Report. Donald trump put out a stalt basically talking about this situation and he is accused of battery and absolutely innocent. That is a quote. Donald trump in in a statement saying hes quote, absolutely innocent. Pandoras founder was returning as ceo. And why do you think the market is not giving founders credit today. This week. Super smart guy. A great leader and generally i think i agree with what the market is saying in the past. Theyre probably better than other companies. And how was the vision and the strategy changed a little bit. Blind spots cause you to say all right i need either another ceo or maybe a strong number two to come in and help me, i mean, steve jobs had tim cook and what are the blind spots that lead you to say its time to do that. This is what i went through. Im a good vision person and product person and when it came to looking at four square seven years in, i was a ceo for seven years, were doing all of these Amazing Things with Data Technology and advertising technology. Those arent my strong suits. Its recognizing the things that youre good at and not so good at and empowering people in the organization to fill the holes for you and the best leaders are able to say im not so great at this. Can you help me do it and youre much better at the ceo role. Why dont you do it as well. It frees you up to come in and see us. Dennis crowley, the executive chairman at four square. Stocks making a big come back from the year to date lows. So why are we still waiting for that market to warm up . Some answers in just a moment. Welcome back. Still in full effect. Only Nine Companies went public in the first quarter. Thats the lowest since 2009. Bob has more of what this means. Its been six weeks since the market bottoms but february 11th one missing element is the rebound in ipos. Where are they . It takes a few weeks to recover after a stock market bottom but were overdue. The two most important factors to get ipos going the state of the market number one and the state of the most recent ipos and since the market bottoms on february 11th its up 10 and the ren dance capital. And both of these are flashing a go for new ipos. Why arent they here yet . The first issue is investor sentiment. Its still very uncertain. We may have had a big bounce off the lows but the overall market is still flat for the year. Its hard to justify. Most ipos are small cap Growth Stocks and if you look at that sector its not done that well this year. Still a lot of uncertainty. Private fund chg is providing some for it to go public. Ubers ceo implied theyre in no h hurry to go public soul cycle, bats global markets, mgm growth properties. And they filed confidentially. They could go public. They have updated their financials in the last couple of weeks. Thats a good sign theyre getting read dy to go public. So bottom line guys is its time to put up or shut up. If something doesnt happen in the next couple of weeks ill be out hearsaying the market is really broken at this point. I give them two weeks. Got to see some big names. Guys back to you. Bob, a quick question. Could it be a good thing in a way that were not getting the iposs but sometimes you get the garbage ipos that shouldnt go public in a market where they would have too many of those companies are going for m a and the Higher Quality companies that will come later. Where are they . We want to see the Higher Quality ones and theyll be the first ones out the door. I didnt throw any of them but i didnt include them on the list. Theyre not going to come. High quality names will be the first one out but still theyre not even coming. Thank you, bob. Coming up, now that the doj has dropped its case, is apples fight against the fbi done for good . Apples former chief evangelist will join us in a moment. Make bd accessible. From anywhere. Hula dancing . Cliff jumping Human Resources can work better. With xerox. Which allergy . Eees. Bees . Eese. Trees . Eese. Xerox helps hospitals use Electronic Health records so doctors provide more personalized care. Cheese . Cheese patient care can work better. With xerox. Thats it. Good morning, here is your cnbc news update at this hour. The federal trade Commission Filing suit against volkswagen for falsely advertising that hundreds of thousands of vehicle were environmentally friendly. They suffered billions of dollars in injury as a result of the emissions deception. The wisconsin governor and former president ial candidate scott walker endorsed ted cruz for the partys nomination. The texas senator is in the best position to win the november president ial election. Campbell soup Company Announced plans to remove bpa from its cans by 2017. Its on track to have 75 of its soup lineup in nonbpa lined cans by the end of the year. And defense secretary ash carter and Robert Mcdonald laid wreaths at the Vietnam Veterans memorial in honor of u. S. Service members killed in the vietnam war. Its part of an on going commemoration to mark the 50th anniversary of that conflict. And that is the news update at this hour. Back downtown to squawk alley. Kayla, back to you. Thank you so much sue. Well after a daylight savings time break and a long Holiday Weekend the close in europe is back as is simon hobbs. Its a mixed day today. Its been a four daybreak for many in europe but mixed overall. Just for the record. We had good data coming through on bank lending today. The fastest ways for four years and now doubt it will also tighten the rules on mortgages as well. Which is big news in the u. K. Its not hugely market moving. The major factors through the session have been the way in which the oil stocks have sold off and the mining stocks have sold off. You will be aware of barclays yesterday and reaffirmed but still the sector is down and the oils have fallen. The banks have also fallen. Particularly some of the weaker banks but some of the stronger ones as well they failed to do a deal in